Economic Trend News
- Central bank raises required reserves
Date: 10-Dec-2007 Sources: (Shenzhen Daily)
THE central bank announced Saturday it would raise the bank reserve ratio requirement by a full percentage point to 14.5 percent with effect from Dec. 25.
The People's Bank of China made the move in order to strengthen the management of liquidity in the banking system and curb the excessive growth of credit, it said in a statement on its Web site.
Xinhua called the new rate an all-time high.
The rise in the requirement, the 10th this year, had been widely expected following exceptionally strong recent economic growth and inflation data and a government vow last week to adopt tight fiscal policies.
China has used the ratio increases, plus a series of interest rate hikes, this year to try to slow a roaring stock market and furious economic growth to prevent overheating.
The bank reserve ratio requirement is the amount of money that commercial banks must hold in reserve. Raising it reduces the amount of money flowing through the economy.
On Wednesday, a top government economic gathering announced a policy shift in 2008 to 'tight?monetary measures from its long-standing 'prudent?stance.
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